Practice Plan’s Donna Hall looks for answers to the questions you’re asking…
My financial forecast isn’t where I thought it would be. How can I bridge the gap?
Never has the saying ‘best laid plans’ felt so apt than this year. All the plans you had at the start of 2020 for your personal life and for your business will have had to be reassessed, rescheduled or shelved, at least for now.
It can feel really stressful to have your plans so disrupted, particularly by something outside of your control – especially when it comes to your business and impacts your financial situation.
Undoubtedly the predictions and goals you made for this year have not come to fruition, and there will be a need to readjust. To find out more about how you can do this, I asked Alun Rees, an experienced dental practice owner turned business coach: My financial forecast isn’t where I thought it would be. How can I bridge the gap?
Alun: ‘2020 will cast a long shadow. The world has had a shock and will take time coming to terms with the consequences. The first pain points for all businesses, come from the lack of activity and the difference between planned and actual cash flow. I want to explore, under five headings, what you can do to stabilise your situation in these difficult times.
This situation is unique but the challenge of cash flow is hardly a new one. Unfortunately, we all have mental blind spots, times and places where we don’t always admit the truth to ourselves. There is always a temptation to avoid answering hard questions and to delay taking difficult decisions. Do that and you will fail. Face the truth, daily. These are not the normal Christmas or summer financial pinch points to navigate.
Every element of your business must perform to survive. Your team, communication style, resilience, agility and leadership will all be tested.
Spreadsheets personalised to your business are essential. Whilst granularity will be required at some point, too much detail can distract.
First load your expenditure, month by month for the next six months. Some will be fixed and some variable. Examine every individual item of the ‘fixed’ costs, what can be reduced? By now you should have had conversations with your landlord or property loan provider with a view to a payment holiday or renegotiation.
Staff costs, reduced by furlough, will only creep upwards so ensure your plans involve the gradual re-introduction of team members only as and when they are needed.
The variables may be different from the past, examine everything carefully before you rely on its value. Laboratory bills and routine materials will have been at or about zero for the lockdown but will increase with the need for PPE. Income figures will reflect your NHS or membership plan commitment and may well have proved to be a lifeline for the business during lockdown.
Use your support network
Do not stick your head in the sand. Talk to your accountant about your situation as a business owner and an individual. They will be able to advise you on ways of reducing your financial commitment, certainly with regards to the taxman. Keep your bank informed, be positive with them, use the information that you should have at your fingertips, demonstrate that you are on top of things, especially if seeking finance.
Cutting expenditure only brings so much benefit. Monitor the situation on a day-by-day basis and don’t be afraid to try new ways of working and increasing income. You must look after your existing patients, but now is a good time to look at those patients considering high-value treatments. Revisit your patient reservoir for cases that will be easier to start; adult orthodontics, tooth whitening and dentures come to mind. Now is a good time to start your marketing for those treatments.
Offering an incentive for early payment of fees, or having your patients take advantage of low-cost finance will help to ease your cash flow.
Take a look at your fees; do they reflect your increased overheads? If not then they must rise. Is now the time to accept that your fees have never been scientifically assessed rather they have evolved by reflecting other practices?
If your hourly rate is not adequate to cover your overheads then you have to work longer hours or charge more.
As the return to work gains momentum there may be setbacks and further waves of disease. Is your practice structure sustainable? Might some of your team, clinical or otherwise, need to be shed? This will be the most difficult of any decisions and is not to be taken lightly.
Be positive, the world needs your skills, you are unique and your patients appreciate that. Be aware that they are going through challenging times also and want a professional team who are clearly in control, are taking the time and effort to do their absolute best for them. Learn the lessons quickly. This too will pass, but only with hard work and good management.’
My thanks to Alun for sharing his thoughts on this topic. Having a plan for the future often helps us to feel secure and that we have a firm footing for what lies ahead. So, it can be unsettling when something comes along that casts those plans awry.
During lockdown there may have been times when patients were unable to attend the practice, to begin laying new plans. However, in a constantly changing situation this can be another challenge and plans may well need to be reviewed more frequently.
Being honest about what the situation is and what, potentially tough, decisions will need to be made, tracking your financial income and outgoings, and being flexible enough to adapt as changes arise, will all be key as you begin closing the gap on where you thought you would be to where you actually are now.
Alun K Rees BDS is The Dental Business Coach. An experienced dental practice owner who changed career he now works as a coach, consultant, trouble-shooter, analyst, speaker, writer and broadcaster. He brings the wisdom gained from his and others’ successes to help his clients achieve the rewards their work and dedication deserve. Visit:www.thedentalbusinesscoach.com
Donna Hall has been a Regional Support Manager at Practice Plan, the UK’s leading provider of practice-branded patient membership plans, for five years. Through this regular column, she offers YOU the chance to ask any questions you may have about dentistry and running a practice today. Simply email email@example.com with your question alongside your job title and location, and let us do the rest!